ASX & NZX Find No Evidence Chorus Could Become Insolvent
The Australian and New Zealand stock exchanges (ASX and NZX) have reported to the Coalition for Fair Internet Pricing
indicating that they have found no evidence to support New Zealand prime minister John Key’s assertion that Chorus Ltd
could become insolvent if his government’s proposed copper tax is not introduced.
“We are pleased with the ASX and NZX conclusions because they confirm that there is absolutely no risk of insolvency
under any of the copper pricing scenarios put forward by the Commerce Commission as the independent regulator. This
means that the roll-out of the Ultra-Fast broadband can proceed as planned,” a spokeswoman for the coalition, Sue
Chetwin, also chief executive of Consumer NZ, said today.
Chorus is part of the NZX15 index, has a market capitalisation of over NZ$1 billion, made a profit of NZ$171 million
last year and paid NZ$95 million in dividends to its shareholders.
“Given Chorus’ financial security, we call on the government to withdraw its proposal to over-ride the Commerce
Commission and impose a copper tax on Kiwi households and businesses – a tax which will benefit no one except support
the profits of the copper lines monopoly,” Ms Chetwin said.
“There is no reason at all for Kiwi households and businesses to pay a dollar more for copper broadband and voice
services than the Commerce Commission says is fair.
“There is no threat to Chorus’s solvency and no threat to the roll-out of Ultra-Fast Broadband. Chorus should simply be
told to get on with the job.”
Mr Key made his insolvency claims on national television on Friday 13 September, saying: “If the Commerce Commision
ruling stands there's a chance Chorus will go broke, in which case the Ultra Fast Broadband (UFB) won't be rolled out.”
He later advised media and the New Zealand Parliament that he stood by these comments.
Asked whether his view that Chorus could become insolvent was based on information not in the public domain, Mr Key told
Parliament it was “based on commercial-in-confidence discussions between Chorus and Ministry of Business, Innovation and
Employment (MBIE) officials” and a private telephone conservation he had with the chair of Chorus, Sue Sheldon, in
December 2012.
Following the prime minister’s comments, the coalition asked the ASX and the NZX to investigate why Chorus had made no
disclosure to the market about any insolvency risk as it would be required to do under both exchange’s listing rules.
On Friday 4 October, the ASX advised the coalition it had reviewed the matter but “has not formed the view … that there
is, or is likely to be, a false market in [Chorus]’s securities”. It advised: “If you do not see a market announcement
about the issues you have raised, you should assume either that our investigation has concluded that there was no breach
of the Listing Rules or, if there was, it has been dealt with to our satisfaction on a confidential basis.”
Yesterday, Wednesday 9 October, the NZX also advised that it “has no reason to challenge [Chorus]’s view that it remains
in compliance with its continuous disclosure obligations under the NZSX Listing Rules”.
ends